Tetra Technologies, Inc.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Tetra Technologies third quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star then the number one on your telephone keypad. I would now like to turn the call over to Kurt Hallad, Treasurer and Investor Relations. Kurt, please go ahead.

Thank you, Tiffany. Good morning, and thank you for joining Tetra's third quarter 2025 earnings call. The speakers for today will be Brady Murphy, Chief Executive Officer, and Alijio Serrano, Chief Financial Officer. Before we begin, I'd like to call your attention to the safe harbor statement in our form 10Q. Some of the remarks we make today may be forward-looking and are subject to risks and uncertainties as outlined in our SEC filings. Actual results may differ materially from those expressed or implied. In addition, we may refer to adjusted EBITDA and other non-GAAP financial measures. Please refer to our press release for reconciliations of GAAP to non-GAAP measures. These reconciliations are not a substitute for GAAP financials, and we encourage you to refer to our 10-Q that was filed yesterday. After Brady and Alijo provide their comments, we will open the line for Q&A. I will now turn the call over to Brady.

Thanks, Kurt, and good morning, everyone. Welcome to Tetra's third quarter 2025 earnings call. Last week, our colleague and good friend Alijo announced that he will retire at the end of March next year. As part of Tetra's succession planning process, Matt Sanderson will replace Elihio as CFO. Matt is currently Executive Vice President and Chief Commercial Officer, having joined Tetra in November of 2016. Through the end of March 2026, both executives will continue in their existing duties and responsibilities to deliver and execute on the company's OneTetra 2030 objectives. Upon his retirement, Elihio will continue to serve in an advisory capacity for the company. Since I became CEO in May of 2019, Alihu has played a key role in working with me and our executive team to refocus the company on our core fluid chemistry expertise and the results speak for themselves. From guiding the company through arguably the industry's most challenging period during the COVID-19 pandemic to the divestiture of our general partnership in CSI Compresco and shaping our One Tetra 2030 strategy, Alihu has been a strong contributor to our current success and future outlook. I, the board of directors, and the rest of the executive team are very grateful for his contribution and are pleased he will continue to serve in a non-executive advisory role. Fortunately, we have a strong executive team that many of our investors had the chance to see and hear from at our recent investor day at the New York Stock Exchange in September. And as part of our succession planning process, Matt is well prepared for the transition to CFO. The recent addition of Kirk Howlett as VP of Industrial Relations, FP&A, and Treasury, along with Katherine Kokinas as CAO, has significantly strengthened our current and future financial organization. I'm confident there will be a smooth and seamless transition. Now I'll summarize some highlights for the quarter, provide an update on our strategic initiatives before turning the call over to Aligio to provide some more details about the financials and our guidance. Our employees delivered a very strong third quarter results against the backdrop of an ongoing challenging industry environment. Our third quarter combined with our first quarter year, first half year results allowed us to reach the highest revenue of $484 million and adjusted EBITDA of $93 million in the past 10 years. Mainly driven by chemicals and deep water completion fluids, This 10-year record is further highlighted by the fact that the overall deepwater rig count is 40% lower than it was 10 years ago, emphasizing the significant deepwater market penetration we have achieved. For the quarter, we achieved revenue of 153 million and adjusted EBITDA of 25 million, with adjusted EBITDA margins of 16%. This represents an 8% year-over-year increase in revenue and 7% rise in adjusted EBITDA. driven by continued strength in our offshore completion fluids and industrial calcium chloride business. Third quarter completion fluids and product revenues increased 39% compared to the previous year period, with adjusted EBITDA margins rising by $6.9 million. Through the first nine months of the year, completion fluids and products adjusted EBITDA margin reached 34.5%, a 500 basis point improvement compared to the same period in 2024. This was driven by a successful completion of three tetra-neptune wells in the Gulf of America, increased demand for high-density zinc bromide completion fluids, strong contributions from Brazil deepwater projects, and robust calcium chloride results in northern Europe. For full year 2025, we believe completion fluids may reach a 10-year high. As highlighted at our recent investor day, the long-term outlook for the completion fluids and products business remains strong, driven by deep water completion activity, exceptional performance in our industrial chemicals business, and a material increase in battery electrolyte revenue as our customer ramps up deliveries from its first automated production line. Water and flow back services revenue declined 2% for the second quarter and 18% year over year. Adjusted EBITDA rose 18% sequentially due to better cost controls but fell 33% from the same period last year on lower activity. Sequential adjusted EBITDA margins improved by 200 basis points to 12%, driven by higher utilization of our patented automated tetrasandstorm and auto drill-out units, efficiency gains, and cost controls. This performance was achieved despite a 12% sequential decline in U.S. frack crew count and a 27% decrease compared to the second quarter of 2024. Despite a muted outlook for the US frac crew count, we expect our onshore testing and flowback business to benefit from three industry trends. Longer laterals, increased sand and water usage, and a continuous rise in overall volumes of produced water. Outside of the US, we are seeing the benefit of material increase in overall unconventional activity in Argentina and the Middle East. We're currently 100% utilized with our automated sandstorms units in Argentina, and have recently been awarded tetrasandstorm work in the Kingdom of Saudi Arabia. In Argentina's Vercamorta region, we've been awarded five contracts related to production testing, sandstorms, and two production facilities, one of which is now operational, and the second is expected to go live in the first quarter of 2026. These recent wins in Argentina, utilizing the technology we've developed in the U.S. on conventional shale plays, expected to almost double our revenue next year in argentina helping to minimize the uncertainty in the u.s onshore activity with respect to our arkansas bromine plant we've generated 58 million of base business free cash flow and invested 28 million in the project through the first nine months of this year we are on schedule and under budget for phase one of the project and remain confident that the plant will be fully operational by the end of 2027. The plant will have a capacity to process 75 million pounds of bromine per year, which is more than double that of our current long-term third-party supply agreement. This will also enable Tetra to generate between 200 to 250 million additional revenue and between 90 and 115 million of adjusted EBITDA, as noted in our definitive feasibility report. Adjusted EBITDA target contribution is underpinned by lower input costs and additional volumes for the battery electrolyte and deep water completion fluids business. At our investor day on September 25th, 2025, we unveiled OneTetra 2030, a strategy focused on leveraging our core fluids chemistry expertise into new high growth and markets, notably delivering battery electrolytes for long duration energy storage, as well as oil and gas produced water desalination solutions. Algaro is the more than double revenue to over 1.2 billion and triple adjusted EBITDA to over 300 million by 2030. We're very appreciative of the attendance and the interest in our Investor Day presentation. The feedback has been overwhelmingly positive and supportive of the strategy and the executive team that will deliver the one Tetra 2030 targets. On the electrolyte front, we're encouraged by the progress EOS Energy continues to make in automating their first manufacturing assembly line and its recent announcement that it will expand its manufacturing capacity in 2026. As the AI push continues to drive increasing energy demand, the importance of power stability through zinc bromide long-duration storage systems appears to be gaining traction, mainly due to its safety, scalability, and domestic sourcing. To account for that, we have completed the installation of our bulk delivery system, which will significantly increase electrolyte volumes in 2026. Moving to water treatment and desalination, the US oil and gas industry is facing an increasingly urgent challenge in managing produced water, particularly in the Permian Basin, where over 6 billion barrels of wastewater are injected into saltwater disposal wells annually. This traditional underground injection method is becoming less feasible as downhole formation pressures keep increasing and storage pore pressure fills up. With the commercial launch of Tetra Oasis and the engineering design of the industry's first 25,000 barrel per day produced water treatment and recycling facility, Tetra is well positioned to lead in solving this problem. The front end engineering and design has been completed and the estimated capital and operating expenses are within our initial projections for the project. This step is facilitating commercial discussions with multiple customers and we remain confident that we could sign our first commercial contract in the coming quarters. We have a strong free cash flow generating base business and our one Tetra 2030 strategy will enable us to leverage our fluids chemistry expertise into new high-growth end markets. We believe this transformation will enable Tetra to generate over $100 billion in annual adjusted free cash flow by 2030 and drive meaningful cash returns for our shareholders. I'll turn it over to Aligio to discuss the financials.